TMI Blog2010 (5) TMI 394X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent. ORDER Mehinder Singh Sullar, J. - As identical questions of law and facts are involved, therefore, we propose to dispose of the aforesaid appeals, which have arisen out of the same impugned order, by this common judgment, in order to avoid the repetition. However, for facilitation, the bare minimum facts that need a necessary mention have been extracted from Company Appeal No. 1 of 2009. 2. The matrix of the facts, culminating in the commencement of, relevant for disposal of present appeals and emanating from the record, is that the appellant-Company The Pradeshiya Industrial and Investment Corporation of UP Limited ( the PICUP Company ) incorporated under the Companies Act, 1956 ( the Act ) had advanced a term loan of Rs. 90 lakhs to M/s. La Medical Devices Limited ( the LMDL Company ). In the wake of Company Petition No. 42 of 1999, the LMDL Company was ordered to be wound up by this Court, vide order dated 7-4-2004. An Official Liquidator was, accordingly, appointed. He ultimately took over all the assets of the Company. Thereafter, on the application of the Liquidator, learned Company Judge ordered the sale of its assets. After publishing the sale noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchaser. 5. The case further proceeds that during the course/period of confirmation of sale, Ex-Managing Director and Promoter of LMDL Company entered into One Time Settlement (hereinafter to be referred as "OTS") with all the creditors. It is a matter of fact that the LMDL Company also entered into the OTS proposal dated 27-2-2007 (Annexure A 3) with PICUP Company for a total sum of Rs. 132 lakhs against a term loan of Rs. 90 lakhs. Consequently, regular agreement dated 19-10-1997 (Annexure A 4) was executed between the parties in this respect with certain terms and conditions mentioned therein. The LMDL Company made the payment of Rs. 97 lakhs to PICUP Company, in pursuance of OTS scheme (Annexure A 3) and agreement (Annexure A 4). 6. The LMDL Company claimed that having made the payment in pursuance of OTS scheme to all the creditors now, it stepped into the shoes of secured creditors and is entitled for the amount already paid by it from its own sources discharging the liability of principal debtor. 7. In order to achieve the desired results, C.M. Jain Ex-Managing Director of LMDL Company moved an application before the learned Company Judge for directing the Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sachindra Nath Chatterjee AIR 1969 SC 823 and of this Court in the cases of Saini Co. Rice Mills v. State of Punjab [CWP No. 2224 of 2005, dated 3-9-2009] and Knitex Overseas (P.) Ltd. v. State Bank of Patiala [2008] PLR 143. 13. Hailing the impugned order, on the contrary, the learned counsel for respondent No. 1 has urged that the Ex-Managing Director of LMDL Company (in liquidation) has already entered into the OTS scheme (Annexure A 3) and the agreement (Annexure A 4) was duly executed between the parties and paid almost the entire agreed amount. Thus, the learned Company Judge has the jurisdiction and rightly enforced the OTS scheme. The argument is that since the PICUP Company has already received approximately the entire amount in pursuance of the OTS scheme, so, no interference is warranted in the interim impugned order in this respect. 14. We have heard the learned counsel for the parties and have gone through the record with their valuable assistance. 15. In the judgments relied on behalf of the appellant in the cases of Central Bank of India v. Ravindra 2002 (1) SCC 367 and Corporation Bank v. D.S. Gowda 1994 (5) SCC 213, after considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xure A 3) and agreement (Annexure A 4) can legally be enforced and there is no merit in these appeals. 21. The main celebrated argument of the learned counsel for the appellant-PICUP Company that the Company Court did not have the jurisdiction to decide such question of implementation of OTS scheme/agreement, which lacks the statutory sanction, is neither tenable nor the observations of Hon ble Supreme Court in Official Trustee s case ( supra ) are at all applicable to the facts of this case, in which, a settlor of a trust reserved to himself the power to vary the terms and conditions of the Trust so far as they related to the quantum of interest given to each of the beneficiaries after the death of the settlor "by his instrument by will alone and in no other way or act". The settlor administered the trust property for sometime and thereafter thought of effecting by deed inter vivos certain changes in the trust. To enable him to do so he took out an originating summons on the original side of the Calcutta High Court under Chapter XIII of the Original Side Rules of that Court seeking primarily two reliefs viz., (1) to have the Official Trustee, Bengal appointed as the Trus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to decide the enforcement of OTS Scheme/agreement in this relevant behalf, as contemplated under section 446 of the Act. 25. The other argument of the learned counsel for PICUP Company that the entire amount of OTS scheme was not paid within the agreed period and since the PICUP Company has cancelled the OTS proposal, vide letter (Annexure C 2/1), so, it cannot be implemented, is again not tenable. As per OTS scheme, the entire amount was required to be paid till 26-6-2007 and the PICUP Company took a hasty step in cancelling it, vide letter (Annexure C 2/1). The agreement (Annexure A 4) contained a clause of penal interest in case of default and the Managing Director of LMDL Company has already paid the amount along with penal interest and under these circumstances, the OTS scheme can be enforced. Reliance in this regard can be placed on the judgment of Hon ble Supreme Court in the case of State Bank of India v. Vijay Kumar AIR 2007 SC 1689. 26. Likewise, a Division Bench of this Court in the case of Sat Kartar Ice General Mills v. Punjab Financial Corpn. 2008 (1) ISJ (Banking) 248 has held that "if a borrower failed to adhere to the agreed time schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter, which can be viewed from a different angle. Again, it is not a matter of dispute that in pursuance of the OTS scheme (Annexure A 3), the agreement (Annexure A 4) between the parties was duly executed, which is enforceable under the law. The contention of the learned counsel for the PICUP Company that as the OTS scheme (Annexure A 3) has already been revoked vide letter (Annexure C 2/1), therefore, the agreement (Annexure A 4) cannot be enforced, is not only devoid of merits, but misplaced as well. Section 5 of the Contract Act posits that "a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer but not afterwards and an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards". Meaning thereby, once the OTS proposal (Annexure A 3) was incorporated in agreement (Annexure A 4), then the same cannot legally be revoked and the parties to such contract are legally required to perform their respective promises as contemplated under Chapter IV of the Contract Act. If any party breaches the contract, then he will face the consequence ..... 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